Ares

Mezzanine loan secured by a prime mixed-use asset in China

Project Ares involved a mezzanine loan to a Hong Kong listed developer, secured by a prime mixed-use asset in Guangzhou, China. 

The loan was successfully exited in 2017, with the principal, all interest and the equity kicker being fully paid.

90m

transaction size (US$)

118k

square metres of GFA

c.40%

equity buffer on loan

external shot of building
external shot of building

Background

The mezzanine loan was used to finance the acquisition of a 49% minority interest in a prime mixed use commercial asset with total GFA of c.118,000 sqm in YueXiu District, Guangzhou. The building comprises serviced apartments, office and retail with the benefit of direct access in the basement levels to the Guangzhou metro network.

Creating Real Value

Our innovative funding solution enabled construction of the mixed-use asset to be completed. The loan was structured to include a fixed interest component and an equity kicker linked to serviced apartment sales, while also benefiting from a robust security package including a personal guarantee from the borrower’s controlling shareholder, a board seat and various equity pledges. 

At time of exit, the sales price of the serviced apartments had materially exceeded underwriting expectations with the office and retail portions benefiting from a c.100% occupancy / leasing rate.

The investment was sourced off-market through InfraRed NF's extensive network in China.

"Over the last decade InfraRed NF has developed deep expertise as a mezzanine lender in China. We are pleased to have successfully exited another transaction further validating our business model." Stuart Jackson
CEO, InfraRed NF Investment Advisers